Pursuant
to Section 4 of Memorandum Circular No. 55 issued by the
Office of the President on February 9, 2004, directing all departments,
bureaus, offices, agencies and instrumentalities of the government, including
government-owned and -controlled corporations to incorporate the use of one
percent (1%) by volume Coconut Methyl Ester in their diesel requirements, the Department of Energy, in consultation with
concerned government agencies and private entities, hereby promulgates and
adopts the following rules and regulations.

This Department Circular shall apply to all
land transport diesel vehicles owned or registered in the name of all
departments, bureaus, offices, agencies and instrumentalities of the government,
including government-owned and controlled corporations and local government
units.

SECTION
4.DEFINITION OF TERMS

a.“Coconut Methyl Ester or CME” –
as defined by PNS 2020:2003, shall refer to fatty ester derived from coconut
oil whose alkyl groups range in varying percentage from C8 to C18 suitable for
compression ignition engines and other similar types of engines.

d.“Accreditation” –
shall refer to the certification issued to a CME manufacturer/supplier having
complied with the prescribed technical criteria (to include, among others,
capability to manufacture PNS-compliant CME, distribution network, etc.) of the
DOE.

e.“PNS” – shall refer to the
Philippine National Standard established by the inter-agency committee,
Technical Committee on Petroleum Products and Additives (TCPPA), created
pursuant to R.A. No. 8749, on quality parameters,
values, and limits of petroleum products including CME.

f.“Diesel requirements” –
shall refer to the diesel fuel consumption of all land transport diesel
vehicles as defined in Section 3 of this Department Circular.

SECTION
5.ROLES AND RESPONSIBILITIES OF
AGENCIES

The Department of Energy (DOE),
created pursuant to R.A. No. 7638, shall be the lead
implementing agency for the CME Program in petroleum applications beginning
with the CME-Diesel blend.The DOE shall coordinate with various government
agencies and private entities involved in CME activities and shall provide
policy direction for the effective implementation of the program.The DOE
shall register CME products, accredit CME manufacturers/suppliers and monitor
the quality of CME. The DOE shall prepare a strategic plan outlining
national goals in the development, utilization and promotion of CME.

The Department of Science and Technology (DOST),
created
pursuant to R.A. No. 2067, through the Philippine
Council for Industry and Energy Research and Development (PCIERD) and
Industrial Technology
Development Institute (ITDI), shall coordinate and provide support on
research and development works on the production and application of CME being
undertaken by the academe, research institutions and others.

The Department of Transportation and Communications
(DOTC), created pursuant to Executive Order Nos. 546 and 125-A, shall
monitor and test emissions of CME-Diesel-run vehicles and provide DOE with annual statistics and inventory of
land transport diesel vehicles owned and registered in the name of all
departments, bureaus, offices, agencies and instrumentalities of the
government, including government-owned and controlled corporations and local
government units.

The Department of Finance (DOF),
created pursuant to Administrative Order Nos. 127 and 127-A, shall develop and
recommend fiscal and nonfiscal incentives as it may deem appropriate for
participating petroleum and oleochemical companies to promote the sustainable
development of this program.

The Philippine Coconut Authority (PCA), created
pursuant to Presidential Decree No. 232,
in
partnership with coconut farmers, processors, refiners and traders shall ensure
security of coconut oil supply by undertaking an aggressive program for
planting, replanting, fertilization, agricultural research and development, and
rehabilitation of the coconut industry and shall formulate a program to
encourage investments and technology for the production of CME to meet the
needs of the domestic market.

SECTION
6.SUPPLY AND DISTRIBUTION OF 1%
CME-DIESEL

In the supply and distribution of 1%
CME-Diesel the following guidelines shall be observed:

a.Each government agency shall be solely responsible for the blending of
CME for its diesel fuel requirements.

b.CME suppliers shall ensure sufficient supply and efficient distribution
of CME based on the government agency’s specific requirements including
storage, mode of procurement and existing logistics and infrastructure.

c.CME suppliers shall make the product available in small packages for
government agencies without storage tanks/dispensing pumps, in
recyclable/refillable containers.

d.CME requirements of the government agencies including government-owned
and controlled corporations and their subsidiaries shall only be procured from
DOE-accredited suppliers of DOE-registered CME products.

To ensure appropriate quality, government
agencies shall procure CME only from suppliers accredited by the DOE-EUMB and whose CME has been duly
registered by the DOE Oil Industry
Management Bureau (OIMB) pursuant to R.A. No. 8479 and R.A. No. 8749.CME products shall be properly labeled (i.e.,
DOE registration number, supplier and
accreditation number, batch information/details including manufacture and
expiry date, etc.) and must be accompanied by a Quality Certificate indicating
the level for its properties (e.g., flash point, water and sediment, kinematic
viscosity, copper strip corrosion, cloud point, acid number, free and total
glycerine).

The DOE
OIMB and Energy Research and Testing Laboratory Services (ERTLS) shall conduct
random spot sampling and laboratory testing and analysis of CME products both
at the manufacturing and distribution/marketing levels to determine compliance
with PNS.The DOE Visayas and Mindanao Field Offices
(VFO/MFO) shall conduct the sampling of CME products in their respective areas
and forward the same to ERTLS.A monthly
summary report shall be submitted to the Policy Advisory Group.

SECTION
9.REPORTORIAL REQUIREMENTS

All government agencies shall submit
monthly reports to the DOE EUMB.Reports from the Visayas and Mindanao shall be coordinated and collated by the DOE
VFO/MFO and submitted to EUMB.The EUMB
shall submit a monthly summary to the Policy Advisory Group.The report shall contain the following
information:

The DOE,
in coordination with DOTC, DOST, DENR,
PCA and other concerned entities, shall
develop a database on vehicle information and CME-diesel fuel source and volume
requirements of government agencies including government-owned and -controlled
corporations and other related data which shall be accessible to the public in
accordance with the guidelines provided in the rules implementing R.A. No.
6713, otherwise known as the Code of Conduct and Ethical Standards for Public
Officials and Employees.

DOE, in coordination with concerned
entities, shall conduct audit on the data gathered and determine the integrity
and accuracy of such data.

SECTION
11.POLICY ADVISORY GROUP

A Policy Advisory Group is hereby created
to provide policy guidance in the implementation of this Department
Circular.It shall be headed by a DOE
Undersecretary to be assisted by second-ranking officials of DENR, DOST,
DOTC, DTI,
DOF, PCA,
representative of the Office of the President and the CME
manufacturers/suppliers.

n.Perform other CME-related functions as may be assigned by the Policy
Advisory Group.

SECTION
13.BUDGET APPROPRIATION

Budget for the implementation of this
program shall be chargeable to the available funds of the respective agencies
subject to the usual accounting and auditing rules and regulations.

The procurement and supply of CME and
diesel shall be done in accordance with R.A. No. 9184, otherwise known as the
Government Procurement Reform Act and its implementing rules and regulations.

SECTION
14.SANCTIONS

Any person who violates any provision of
this Department Circular shall be imposed the corresponding criminal, civil
and/or administrative sanctions as provided under existing applicable laws,
rules and regulations.

SECTION
15. FINAL PROVISIONS

All Department orders, rules and
regulations inconsistent with or contrary to the provisions of this Department
Circular are hereby repealed and modified accordingly.

If any provision of this Department
Circular or the application of said provision to any person or circumstances is
declared unconstitutional, the remainder of the Circular or the application of
such provision to other persons or circumstances shall not be affected by the
said declaration.

SECTION
16.EFFECTIVITY

This Department Circular shall take effect
ninety (90) days from the date of its publication in at least two (2)
newspapers of general circulation.

The duration of this program shall be one
(1) year from the effectivity of this Department Circular.